SHFE Market Movement on March 05th, 2010 (Friday)

March 5 (Bloomberg) -- OAO GMK Norilsk Nickel, Russia's largest mining company, offered to process &quot;substantial&quot; amounts of the nation's copper stockpiled during the Soviet era as the company struggles to meet demand with its own supplies.
&quot;We are running short of copper and could be selling more than we are producing,&quot; Deputy Chief Executive Officer Oleg Pivovarchuk said March 2 in an interview in Moscow, declining to say whether Norilsk would buy the metal or just process it. &quot;We made a serious offer to the government for the copper.&quot;
Moscow-based Norilsk submitted its offer to Rosreserve, the federal agency overseeing the inventories, about two weeks ago and it anticipates the proposal may be approved by April or May so stockpiles can be processed before winter, Pivovarchuk said.
Norilsk CEO Vladimir Strzhalkovsky on Jan. 30 met Prime Minister Vladimir Putin and asked him to help speed up approval of the plan. An account of the meeting on the government's Web site didn't give details of the company's offer, saying only that it involved state reserves of copper concentrate, a semi- processed ore that is shipped from mines to smelters.
The company is seeking ways to benefit from a price rebound as its production falters because it is mining ore with a lower copper content. Strzhalkovsky, who forecast copper production will drop 5 percent for a second year in 2010, told Putin that allowing Norilsk to process the state reserves will help use up idle capacity, according to the government's Web site.
Norilsk will mix stockpiled concentrate, which contains nickel, precious metals and cobalt as well as copper, with its lower-grade feed, he said. The company doesn't maintain any stockpiles of copper or nickel, Pivovarchuk said.
Speculative Gains 
Prices for copper, used in wires and pipes, and nickel, a stainless steel raw material, have been driven higher by speculation and may be unsustainable, he said. Copper for three- month delivery on the London Metal Exchange more than doubled last year and traded at $7,402 a metric ton late yesterday, while nickel jumped 58 percent and traded at $22,300 a ton.
Nickel producers may restart idled capacity should prices hold above $20,000 a ton, adding to a surplus this year that may reach 25,000 tons to 30,000 tons, Pivovarchuk said.
&quot;Every additional 25,000 to 40,000 tons could have a very negative impact&quot; if investor sentiment on nickel turns causing a plunge in price similar to the one in 2008, he said. &quot;The higher the price is now, the lower it will fall.&quot;
A copper price above $7,000 a ton is &quot;unjustified,&quot; while palladium is &quot;clearly undervalued&quot; and should cost &quot;somewhere between platinum and gold,&quot; Pivovarchuk said. 
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